carryover basis

carryover basis

In tax accounting, the retention of an earlier basis (adjusted acquisition cost) in property even though the property has changed hands.This happens most often in two instances: (1) Someone acquires property by gift. The basis is the same as it was in the hands of the donor, adjusted upward for any gift taxes paid by the donor.(2) In a 1031 exchange,in which like-kind property is exchanged for other like-kind property in a sort of perfectly legal accounting sleight of hand, the basis in property acquired is the same as the basis in the property given up,even though both might currently have substantially different fair market values.

51) With the [section] 338 election, the acquiring corporation takes a cost basis in the target corporation's assets, (52) whereas if no election is made, the acquiring corporation takes a carryover basis.

The Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) repealed the federal estate tax and replaced it with a carryover basis regime that is effective on the estates of those who die after Dec.

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